Honda plans to introduce a two-wheeler model every three
months and expand its dealerships to reach about 10 million in
sales, or a third of the 30 million-unit market by 2020,
according to Tatsuhiro Oyama, senior managing officer in charge
of motorcycle operations. The Tokyo-based company’s Indian
deliveries rose 40 percent last year to 2.52 million units.

“We want to be number one in every market we are in, its
unacceptable at the company to not be number one,” Oyama said
in an interview in Tokyo on Feb. 12. “When wages go up,
motorcycle sales directly get a boost.”

Honda, which ended a 26-year-old joint venture with Hero in
2010, is banking on a lack of public transportation in rural
areas to boost demand for motorcycles and scooters among the
country of 1.24 billion people. Competition is intensifying as
Hero, Bajaj Auto Ltd., and Yamaha Motor Co. roll out new models
to attract buyers.

Honda had about 18 percent of the Indian two-wheeler market
last year, overtaking Chennai-based TVS Motor Co. to become the
country’s third-largest two-wheeler maker, according to data
from the Society of Indian Automobile Manufacturers. Hero is
India’s biggest motorcycle maker with a 43 percent share of the
market.

Strong Demand

“The long-term growth prospects in the two-wheeler
industry in India remain intact as there is strong demand due to
the low penetration in the market,” said Ashwin Patil, an
analyst at LKP Shares & Securities in Mumbai. “Honda has
already dethroned TVS and is giving Bajaj and Hero stiff
competition.”

Honda has introduced at least seven new models since it
parted ways with Hero, which has added four new models. Bajaj,
India’s second-largest motorcycle maker has rolled out at least
five in the period.

Last May, Honda introduced the 44,657 rupee ($830) 110-cc
Dream Yuga motorcycle to compete with Hero’s 42,250 rupee ($785)
100-cc Splendor, which was built using the Japanese company’s
technology. Honda plans to add another model this year in the
same segment, which makes up about half of the industry, Oyama
said.

The company also plans to increase the number of
dealerships from the 1,653 it currently has in the country,
Oyama said, without giving a target.

New Factory

A new factory in Bangalore, southern India, will open this
April, expanding Honda’s total production capacity in the
country to 4 million units a year. Depending on demand, an extra
line may be added at the factory to boost capacity to 4.6
million units, Oyama said.

Oyama expects sales to grow “by at least 1 million units”
with the new factory in the year ending March 2014. Honda will
decide on its next factory investment in “about a year and a
half’s time,” he said.

Industrywide sales of two-wheelers will probably outpace
the auto association’s estimate for 5 percent to 7 percent
growth to 14.4 million units for the year ending March 31, he
said.

India doesn’t limit the number of new vehicles allowed on
the road, which creates greater potential for growth, Oyama
said. “Our battleground is right here, and demand for
motorcycles will further accelerate.”